Bank FX views in one page, covering the key drivers, clear bias by pair, and the week’s events that move markets.

USD

The US dollar is being pulled in two directions. On one side, high oil prices, Middle East uncertainty, and sticky inflation are giving the dollar support. Westpac notes that the USD was broadly bid as markets priced a longer Fed pause and higher oil-driven inflation risks. Scotiabank also expects the Fed to hold this week, with Powell unlikely to guide markets toward near-term easing while inflation risk is still front of mind.

On the other side, Danske Bank still expects the Fed to cut in September and December once the supply shock is clearer and growth softens. Marc to Market is also cautious about chasing USD strength after April’s decline, saying the greenback looks stretched enough for a short-term bounce but still faces a weaker medium-term trend.

For traders, the USD bias is mixed near term. It can still catch safe-haven bids if oil or Iran headlines worsen, but the medium-term risk is lower if the Fed turns back toward cuts while other central banks stay hawkish.

EURUSD

EUR/USD remains caught between euro area stagflation risk and a more hawkish ECB path. Danske Bank expects the ECB to hold this week but keep the door open to hikes in June and July, mainly to stop inflation expectations from drifting higher. Commerzbank has a similar view, saying this week is too early for an ECB hike, but pass-through risks from energy prices could justify a precautionary hike in June.

The weak point for EUR is growth. Danske Bank highlights the sharp fall in euro area services PMI, while Scotiabank says the upcoming CPI and GDP prints will only partly show the full shock from higher energy prices. That means EUR/USD can rise if the ECB sounds firm, but it is vulnerable if the data show demand is fading faster than inflation.

The trading implication is a cautious bullish bias. The ECB is closer to hiking than the Fed, but the pair needs stable risk sentiment and no deeper euro area growth shock to extend higher.

GBPUSD

GBP has support from a less dovish Bank of England, but the UK backdrop is not clean. Lloyds Bank expects the BoE to hold Bank Rate at 3.75%, after the Iran war pushed inflation risk higher and ended the earlier case for rate cuts. Lloyds also says the MPC will likely repeat that it is ready to act if second-round inflation effects appear.

Danske Bank also expects the BoE to stay on hold, but it sees risks tilted toward hikes rather than cuts. It points to stronger UK PMIs and sticky services inflation, while also warning that weak consumer sentiment and a cooler labour market limit how far the BoE can go.

For traders, GBP/USD looks neutral to mildly bullish versus the USD while rate cuts are off the table. But GBP is less attractive than EUR or AUD because UK growth is fragile and higher energy prices hit consumers hard.

USDJPY

USD/JPY remains supported by wide yield gaps and fragile risk sentiment, but the case for a stronger yen is building. Scotiabank expects the BoJ to hold this week but deliver hawkish cues, with wage gains above 5% strengthening the case for more policy normalisation. Westpac also expects the BoJ to stay on hold in April but continue to signal further hikes, with June still in play.

Marc to Market notes that the market has largely priced out an April BoJ hike, but still sees a June move as likely and July almost fully priced. That leaves USD/JPY exposed if BoJ guidance is firmer than expected.

The pair is still high and sensitive to yield moves. A clean break lower probably needs either a hawkish BoJ or softer US data. Until then, USD/JPY can stay elevated, but upside looks harder to chase near 160.

AUDUSD

AUD remains one of the better-supported G10 currencies. Westpac says AUD held up better than NZD as markets priced a more hawkish RBA and stronger commodity support. It also expects Q1 headline CPI at 1.5% q/q and trimmed mean CPI at 0.9% q/q, which would keep pressure on the RBA.

CommBank also focuses on Australia’s inflation risk, noting that the March CPI release is expected to show a large lift from petrol prices, with the bigger impact still likely to come through in Q2. Westpac’s weekly forecasts show AUD/USD at 0.72 by June and 0.73 by year-end, supported by higher rates and commodity exposure.

The main risk is China and global growth. Commerzbank says Asia is facing a stagflation shock from Hormuz, but China and electronics exporters are cushioned by AI demand. That helps AUD, but only while risk sentiment holds.

For traders, AUD/USD has a constructive bias, especially on dips, but it remains headline-sensitive.

NZDUSD

NZD is under more pressure than AUD. Westpac says New Zealand faces softer demand, rising costs, and weaker hiring plans. It now expects inflation to rise to 4.5% in mid-2026 and sees the RBNZ starting a tightening cycle from September, lifting the OCR from 2.25% to 3.50% by early 2027.

That should support NZD over time, but the near-term picture is harder. Westpac notes that businesses are seeing weaker demand and margin pressure, while higher fuel and supply-chain costs are lifting prices. This is not a clean growth story.

Against AUD, NZD looks weaker. Westpac’s forecasts show AUD/NZD near 1.22 by June before easing later, which matches current market pricing where AUD is getting more direct support from RBA risk and commodities.

For traders, NZD/USD is neutral to slightly bullish versus USD over time, but weaker than AUD.

USDCAD

CAD has held up well despite a stronger USD. Scotiabank’s CAD Weekly says CAD outperformed most major peers over the past week, helped by oil, seasonal support, and technical momentum. Scotiabank’s model points to a 1.3615 to 1.3810 range for USD/CAD this week, but it thinks rebounds should stay capped in the low to mid-1.37s.

Scotiabank Economics is also more hawkish than consensus on the BoC. It expects no change at this meeting, but says the BoC may revise growth and inflation higher and sound more hawkish because the commodity shock is positive for Canada’s terms of trade and inflation risk.

The key disagreement is timing. Scotiabank argues the BoC may need to remove earlier insurance cuts and move toward a 3% policy rate, while Westpac sees the BoC holding this week as it assesses downside risks to activity.

For traders, USD/CAD bias stays lower while oil is firm and USD rebounds are capped. A break below 1.3625 would open the 1.3500 to 1.3525 area.

Other Pairs

Asian FX remains under pressure from the Hormuz shock. Commerzbank says Asia is the region most exposed to the Strait closure, with high oil import dependence and heavy reliance on Middle East energy flows. It says Asian currencies have weakened against the USD since end-February, with INR and IDR among the weakest.

CNY is the exception. Commerzbank says CNY is up year-to-date, helped by strong exports, stronger PBoC fixings, and China’s desire to appear stable before the Trump-Xi summit. The broader point is simple: oil importers remain vulnerable, while exporters and currencies backed by tighter policy should hold up better.

Bias Table

Key Event Outlook

United States

The FOMC is the main event. Most banks expect no change, but Powell’s press conference matters because inflation has risen, oil remains volatile, and Kevin Warsh’s nomination is moving through the political process. Danske Bank expects the Fed to stay on hold through summer and cut in September and December. Scotiabank expects one cut late this year and another in early 2027.

US GDP, PCE inflation, personal spending, employment costs, and ISM manufacturing are also due. Weak growth with firm inflation would keep FX markets choppy. Softer inflation would weigh on USD, while strong PCE could extend the Fed pause and support the dollar.

Eurozone

The ECB is expected to hold, but markets will watch Lagarde’s tone closely. Danske Bank expects no April hike but sees hikes in June and July. Commerzbank thinks a June precautionary hike is possible if energy pass-through risk persists.

Eurozone CPI and Q1 GDP arrive just before the ECB decision. Higher inflation with weak growth would keep EUR supported by rates but capped by recession fears.

United Kingdom

The BoE is expected to hold at 3.75%. Lloyds Bank expects the Bank to sound ready to act if second-round inflation effects appear, while Danske Bank expects no rate changes for the next 12 months but says risks are tilted toward hikes.

For GBP, the key is whether the BoE pushes back against market pricing for hikes. If it does not, GBP can stay supported. If it sounds worried about growth, GBP may underperform.

Japan

The BoJ is expected to hold this week, but updated forecasts and guidance matter. Banks are watching for hawkish signals after strong wage gains and still-high import costs. A stronger BoJ signal would support JPY and could pull USD/JPY lower from elevated levels.

Tokyo CPI and retail data later in the week will help shape expectations for June.

Australia

Australian CPI is the key local event. Westpac expects a strong Q1 headline print and firm trimmed mean inflation, while CommBank also expects petrol prices to lift the March CPI sharply. A hot CPI print would support RBA hike pricing and AUD.

China PMIs also matter for AUD. A stable China print would help, especially with industrial and AI-linked demand still supporting parts of Asia.

New Zealand

NZ employment, business confidence, consumer confidence, and building consents are in focus. Westpac says New Zealand’s economy is facing a difficult mix of higher inflation and softer demand. Stronger pricing intentions would support RBNZ hike risk, but weaker activity would limit NZD upside.

Canada

The BoC decision, federal Spring Economic Update, and February GDP are the main events. Scotiabank expects the BoC to hold at 2.25%, but with a more hawkish bias because inflation and commodity-driven growth risks have risen.

CAD should stay supported if oil remains firm and USD/CAD rebounds fail near the low to mid-1.37s.

Other / Geopolitics

Middle East headlines remain the largest cross-market driver. If talks progress and the Strait of Hormuz reopens, oil could fall, risk sentiment could improve, and USD safe-haven demand could fade. If the proposal fails, higher oil would support USD, CAD, NOK, and possibly AUD, while pressuring Asia FX and oil importers.